For all those worrying about London's 'booming' economy and the urgent need for rebalancing, here's a fascinating lesson from history (sent to me by a colleague* and taken, I believe, from Birmingham 1939-1970. History of Birmingham Volume 3 by A. Sutcliffe and R. Smith):
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Birmingham itself was second only to London for the creation of new jobs between 1951 and 1961. Unemployment in Birmingham between 1948 and 1966 rarely exceeded 1%, and only exceeded 2% in one year. By 1961 household incomes in the West Midlands were 13% above the national average, exceeding even than those of London and the South East. Although employment in Birmingham's restricted manufacturing sector shrank by 10% between 1951 and 1966, this was more than made up during the early post-war period for by employment in the service sector, which grew from 35% of the city's workforce in 1951 to 45% in 1966. As the commercial centre of the country's most successful regional economy, Central Birmingham was the main focus outside London for the post-war office building boom. Service sector employment in the Birmingham conurbation grew faster than in any other region between 1953 and 1964, and the same period saw 3 million sq ft of office space constructed in the city centre and Edgbaston. The city's economic boom saw the rapid growth of a substantial merchant banking sector, as major London and international banks established themselves within the city, and professional and scientific services, finance and insurance also grew particularly strongly. However this service sector growth itself attracted government restrictions from 1965. Declaring the growth in population and employment within Birmingham to be a "threatening situation", the incoming Labour Government of 1964 sought "to control the growth of office accommodation in Birmingham and the rest of the Birmingham conurbation before it got out of hand, in the same way as they control the growth of industrial employment". Although the City Council had encouraged service sector expansion during the late 1950s and early 1960s, central government extended the Control of Office Employment Act 1965 to the Birmingham conurbation from 1965, effectively banning all further office development for almost two decades.
Up until the 1930s it had been a basic assumption of Birmingham's leaders that their role was to encourage the city's growth. Post-war national governments, however, saw Birmingham's accelerating economic success as a damaging influence on the stagnating economies of the North of England, Scotland and Wales, and saw its physical expansion as a threat to its surrounding areas – "from Westminster's point of view was too large, too prosperous, and had to be held in check". A series of measures, starting with the Distribution of Industry Act 1945, aimed to prevent industrial growth in the "Congested Areas" – essentially the booming cities of London and Birmingham – instead encouraging the dispersal of industry to the economically stagnant "Development Areas" in the north and west. The West Midlands Plan, commissioned by the Minister for Town and Country Planning from Patrick Abercrombie and Herbert Jackson in 1946, set Birmingham a target population for 1960 of 990,000, far less than its actual 1951 population of 1,113,000. This meant that 220,000 people would have to leave the city over the following 14 years, that some of the city's industries would have to be removed, and that new industries would need to be prevented from establishing themselves in the city. By 1957 the council had explicitly accepted that it was obliged "to restrain the growth of population and employment potential within the city."
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[* update: my colleague tells me that he, in turn, got this from Jon Neale at Jones Lang Lasalle]
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